1. Present winding up petition has been filed under Section 433(e) read with Sections 434 and 439 of the Companies Act, 1956 (for short ‘Act’) for winding up of the respondent company. The application being CA 1290/2007 has been filed seeking appointment of a Provisional Liquidator.

2. The facts as borne out from the petition are that the respondent company on 31st December, 2003 had placed a purchase order on the petitioner for conveyor system 4x4x6 along with accessories, source raising mechanism, pressure plate for its irradiation plant at Sonepat for a consideration of ` 1,26,00,000/-. Thereafter, a number of revisions were made in the purchase order from time to time and finally the respondent company was to pay to the petitioner a sum of ` 1,90,83,443/-inclusive of statutory charges. According to petitioner, it had fulfilled all its obligations under the purchase order but the respondent company paid only a sum of ` 1,67,19,053/-to the petitioner leaving a balance of ` 23,64,390/-as outstanding.

3. Thereafter, on 27July, 2006 an agreement was executed between the parties whereby it was agreed that the respondent company would pay the balance amount to petitioner and the petitioner as a goodwill gesture would help the respondent company in identifying and solving the problems in running the conveyor system.

4. In pursuance to the said agreement, respondent company issued two posted dated cheques dated 10August, 2006 and 20August, 2006 for a sum of ` 3 lacs and ` 4 lacs respectively to the petitioner.

On presentation the cheque dated 10August, 2006 got dishonoured for the reason „insufficient funds?. The respondent company requested the petitioner not to take action against it and replaced it by Demand Draft for a sum of ` 3 lacs, which was honoured. Thereafter, the cheque dated 20August, 2006 was also dishonoured on presentation for the reason “payment stopped by drawer”. Once again the respondent company requested the petitioner not to take any action and informed the petitioner that it had already got a demand draft made in favour of the petitioner for a sum of ` 2 lacs and that the balance payment would be made shortly. The respondent company also faxed to the petitioner a copy of a demand draft bearing no. 000230 dated st August, 2006. However, this draft was also got cancelled by it and the payment was never made to the petitioner. Hence this petition was filed.

5. Mr. Rajiv Bahl, learned counsel for the respondent company raised a preliminary objection that resolution passed by the Board of Directors of the petitioner company on 8December, 2007 was for recovery of outstanding dues of respondent company and not for filing the winding up petition against the respondent company. He pointed out that the petitioner company had filed a civil suit for recovery which is pending before Original Side of this Court. He submitted that the petition was liable to be dismissed on this ground alone.

6. Mr. Bahl next submitted that there was no privity of contract between respondent company and petitioner company and the transactions in question were between respondent company and another company, i.e., Praja Technologies Ltd.

7. Mr. Bahl stated that, in fact, the respondent company had made payment to the tune of ` 1,74,99,460/-as against due amount of ` 1,71,75,100/-, thus making an excess payment of ` 3,24,360/-. He further submitted that the original contract was on turnkey basis and the petitioner was responsible for completion and normal running of the complete system and that time was the essence of the contract. He submitted that there was a considerable delay in installation of the system and there were defects in the working of the conveyor system from the very beginning. He further submitted that respondent company wrote a number of letters requesting the petitioner to rectify the said defects and to finish the installation in a time bound manner. In this context, he referred to numerous letters written by respo